HMRC interest statement incorrect

pecunianonolet

Hi all,

End of November 23 I received a letter from HMRC informing me about a tax code change. One reason for adjustment was untaxed interest.

The untaxed interest was stated to be £16. That got me thinking. 

In the previous tax year I received £24.55 interest above my PSA.

I phoned HMRC and asked for a detailed breakdown. After some conversation the advisor, initially reluctant, said he will issue the breakdown and I received it today. The advisor said I would not really need it as they are actual, not estimated figures.

The BBSI (Bank and Building Society Interest) statement claims I received £71 of untaxed interest above my PSA. 

The detailed statement shows actual reported figures and except of one entry they all match a) my own records and b) the annual interest statements I received by bank and building societies. 

I took out 3 bonds with Atom in November 2022 of 6, 9 and 12 months. All 3 of them paid interest back into the bond and I had throughout the duration of the bonds the option to change the destination of where interest is paid monthly. 

Interest on the 6 month bond was paid on the 24th of each month, with the first payment on the 24th December 2022 and the last on 24th May 2023. So 4 months fall into the previous and 2 months into the current tax year. The figures of 9 and 12 months bonds are correct. I am aware of the very long conversation about accessible interest, when it arises, etc. but that's a very different can of worms.

The HMRC statement has the figure of the 6 months bond £18.88 lower compared to what I actually received and what is on the Atom statement. 

Interest received from Zopa, Kroo, Tandem and Paragon Bank are not showing at all in the HMRC table.

For Zopa, the interest statement shows £3.90 but what I actually got paid into the account is £3.86, so the annual statement is out by 4p. Maybe worth to raise a complaint to trigger an investigation (inquired 2 times before without success before I gave up).

In summary:

• £24.55 of taxable interest above my PSA
• HMRC claims £571 received in untaxed interest
  
• Adding up the sum in the HMRC table received means I am below my PSA
• Tax code adjustment of £16

I know, it is my responsibility to make sure I pay the right amount of tax. I should phone again, tell them that the number received from Atom is higher. Next financial year, I am sure, Atom will report a higher number so I will have to phone again to tell them it is actually lower or maybe they report correctly and I would get away with £18.88 of untaxed interest, which would actually be taxable.

What about the data from the institutions missing in the table? Have they been part of any calculation or just missed off in the table, will they be reported against the current tax year, missed off altogether?

Getting through to HMRC to request this info took me 45 min waiting time for a 5 min conversation. Incorrect or not reported interest is a big failure by the institutions and I am sure could cause some fines. 

I am tempted to just leave it that way, take the £16 reduction to my tax code and move on. Nobody and surely not HMRC compensate me for my time listening for a hour on the phone that I moved forward in the queue. Should it be incorrect next tax year and to my disadvantage, I could phone them to correct it so it is in my advantage again.

What would you do? I am actually not sure what I should do. All I can say is, request the statement and check it in detail. HMRC really is a messed up authority.

BoGoF

In this instance HMRC are only quoting back to you the figures reported by the various institutions that have reported taxable interest to them. However it seems that aome institutions do not report to.HMRC despite there being legislation compelling them to do so.

HMRC has it's failings but not sure for your particular problem that they are at fault.

pecunianonolet

BoGoF said:

In this instance HMRC are only quoting back to you the figures reported by the various institutions that have reported taxable interest to them. However it seems that aome institutions do not report to.HMRC despite there being legislation compelling them to do so.

HMRC has it's failings but not sure for your particular problem that they are at fault.

My tax code adjustment is £16, which implies to me I have received £16 interest above my PSA, unless that's not the way it's calculated? My tax code is not the standard 1257 which now got adjusted, it's actually higher as I claim expenses.

The BBSI letter quotes £71 interest received above my PSA. If I do the sums of the figures reported in the table they sent I should not pay any tax as I am within my PSA. I actually received  interest of £24.55 above my PSA.

So even if institutions didn't report to HMRC in the first place or incorrect numbers, the rest of the story should be at least coherent, which it isn't, unless data is missing on the sheets they sent me.

Dazed_and_C0nfused

I'm sure someone else posted saying the HMRC advisor on their case had only sent page 1 of what we're actually 2 pages of account details, maybe that is the case here?

The tax code adjustment is for one of two things, either it's £16 because you have £16 of spare Personal Allowance (the interest uses that before either of the 0% tax bands).

Or it is an adjustment to collect additional tax due.  For example say HMRC estimated you owed ~£3.20 in tax on the interest (for 2023-24) and you were a basic rate payer.  That £16 deduction would result in your employer or pension payer deducting an extra £3.20 in tax (£16 x 20%).

Or it could be ~£6.40 is the estimated tax and HMRC estimate you will be paying higher rate tax in the current tax year (£16 x 40% = £6.40).

Not sure if it will help but your tax code may show additional information if viewed via your Personal Tax Account?

Also, your post is a little confusing regarding the amounts, in particular this comment.

Is your 0% band £500 or £1,000?

HMRC claims £571 received in untaxed interest

Adding up the sum in the HMRC table received means I am below my PSA

IvanOpinion

This is why I can't get thru to HMRC to resolve an issue resulting in them taking an extra £400 per month out of my pay packet. 

masonic

In the past, when I have had untaxed income, I have written to HMRC with full details of the relevant income. They have replied a few weeks later with a P800 calculation based on the information I provided. This process was fairly painless. Nowadays I submit a tax return.

If you notify them of the correct details, then its their problem if they overrule you and you underpay as a result. I would just want them to get it right first time so that they don't come back for a second bite at the cherry if a financial institution reports late or amends their figures.

pecunianonolet

Dazed_and_C0nfused said:

I'm sure someone else posted saying the HMRC advisor on their case had only sent page 1 of what we're actually 2 pages of account details, maybe that is the case here?

The tax code adjustment is for one of two things, either it's £16 because you have £16 of spare Personal Allowance (the interest uses that before either of the 0% tax bands).

Or it is an adjustment to collect additional tax due.  For example say HMRC estimated you owed ~£3.20 in tax on the interest (for 2023-24) and you were a basic rate payer.  That £16 deduction would result in your employer or pension payer deducting an extra £3.20 in tax (£16 x 20%).

Or it could be ~£6.40 is the estimated tax and HMRC estimate you will be paying higher rate tax in the current tax year (£16 x 40% = £6.40).

Not sure if it will help but your tax code may show additional information if viewed via your Personal Tax Account?

Also, your post is a little confusing regarding the amounts, in particular this comment.

Is your 0% band £500 or £1,000?

HMRC claims £571 received in untaxed interest

Adding up the sum in the HMRC table received means I am below my PSA

Yes, PSA is £500. The figures in the HMRC table detailed by institution and account comes to £498

The letter contained two sheets of paper. One was a cover letter, claiming when I contacted HMRC and why and that I have £571 of untaxed interest. The other is a double sided sheet with printed table of the reported interest. Each page has a small print on claiming 1of4, 2of4, etc. The page with the table had still space on one side to add more data, so I don't think something wasn't sent. 

Dazed_and_C0nfused

pecunianonolet said:

Dazed_and_C0nfused said:

I'm sure someone else posted saying the HMRC advisor on their case had only sent page 1 of what we're actually 2 pages of account details, maybe that is the case here?

The tax code adjustment is for one of two things, either it's £16 because you have £16 of spare Personal Allowance (the interest uses that before either of the 0% tax bands).

Or it is an adjustment to collect additional tax due.  For example say HMRC estimated you owed ~£3.20 in tax on the interest (for 2023-24) and you were a basic rate payer.  That £16 deduction would result in your employer or pension payer deducting an extra £3.20 in tax (£16 x 20%).

Or it could be ~£6.40 is the estimated tax and HMRC estimate you will be paying higher rate tax in the current tax year (£16 x 40% = £6.40).

Not sure if it will help but your tax code may show additional information if viewed via your Personal Tax Account?

Also, your post is a little confusing regarding the amounts, in particular this comment.

Is your 0% band £500 or £1,000?

HMRC claims £571 received in untaxed interest

Adding up the sum in the HMRC table received means I am below my PSA

Yes, PSA is £500. The figures in the HMRC table detailed by institution and account comes to £498

The letter contained two sheets of paper. One was a cover letter, claiming when I contacted HMRC and why and that I have £571 of untaxed interest. The other is a double sided sheet with printed table of the reported interest. Each page has a small print on claiming 1of4, 2of4, etc. The page with the table had still space on one side to add more data, so I don't think something wasn't sent. 

Not following that to be honest.

You seem to be saying HMRC are telling you that their records show you received £498.  But then it changes to £571.

Confused.com!

eskbanker

Dazed_and_C0nfused said:

pecunianonolet said:

Yes, PSA is £500. The figures in the HMRC table detailed by institution and account comes to £498

The letter contained two sheets of paper. One was a cover letter, claiming when I contacted HMRC and why and that I have £571 of untaxed interest. The other is a double sided sheet with printed table of the reported interest. Each page has a small print on claiming 1of4, 2of4, etc. The page with the table had still space on one side to add more data, so I don't think something wasn't sent. 

Not following that to be honest.

You seem to be saying HMRC are telling you that their records show you received £498.  But then it changes to £571.

Confused.com!

HMRC are asserting that the total figure is £571 in the letter, but the attached listing of the detail sums to £498.

Dazed_and_C0nfused

eskbanker said:

Dazed_and_C0nfused said:

pecunianonolet said:

Yes, PSA is £500. The figures in the HMRC table detailed by institution and account comes to £498

The letter contained two sheets of paper. One was a cover letter, claiming when I contacted HMRC and why and that I have £571 of untaxed interest. The other is a double sided sheet with printed table of the reported interest. Each page has a small print on claiming 1of4, 2of4, etc. The page with the table had still space on one side to add more data, so I don't think something wasn't sent. 

Not following that to be honest.

You seem to be saying HMRC are telling you that their records show you received £498.  But then it changes to £571.

Confused.com!

HMRC are asserting that the total figure is £571 in the letter, but the attached listing of the detail sums to £498.

I wonder if HMRC use the same IT supplier as the Post Office 😳

eskbanker

Dazed_and_C0nfused said:

I wonder if HMRC use the same IT supplier as the Post Office 😳

They do indeed (among others) - the fact that Fujitsu has continued to win substantial volumes of UK Government business long after the Horizon scandal started has been covered fairly extensively, even though they've belatedly said they're not going to bid for any more until it's over....